Full Judgment Text
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CASE NO.:
Appeal (civil) 9140 of 1996
PETITIONER:
COLLECTOR OF CENTRAL EXCISE, NEW DELHI
RESPONDENT:
GURU NANAK REFRIGERATION CORPN.
DATE OF JUDGMENT: 27/03/2003
BENCH:
SYED SHAH MOHAMMED QUADRI & ASHOK BHAN
JUDGMENT:
JUDGMENT
2003 (3) SCR 57
The following Order of the Court was delivered :
SYED SHAH MOHAMMED QUADRI, J. Heard the learned counsel for the parties.
In this appeal against the final order No. 601 of 1995-A of Customs Excise
& Gold (Control) Appellate Tribunal, New Delhi (for short ’the Tribunal’)
in appeal No.E/1745/83-A dated 03.11.1995, the only point that arises for
our consideration is : whether the Tribunal is right in reversing the order
of the Assistant Collector as confirmed by the Collector.
To appreciate the controversy in this appeal it is necessary to refer to
Section 4 of the Central Excise Act, 1944 (for short, ’the Act’) as it
stood during 1975-76, which, insofar as it is relevant for our purpose,
read as follows :-
"4. Valuation of excisable goods for purposes of charging of duty of
excise-
(1) Where under this Act, the duty of excise is chargeable on any
excisable goods with reference to value, such value shall, subject to the
other provisions of this section, be deemed to be-
(a) the normal price thereof that is to say, the price at which such
goods are ordinarily sold by the assessee to a buyer in the course of
wholesale trade for delivery at the time and places of removal, where the
buyer is not a related person and the price is the sole consideration for
the sale :
Provided that- xxx xxx xxx
(b) where the normal price of such goods is not ascertainable for the
reason that such goods are not sold or for any other reason, the nearest
ascertainable equivalent thereof determined in such manner as may be
prescribed.
(2) xxx xxx xxx
(3) xxx xxx xxx
(4) For the purposes of this section,-(a) to (d) xxx xxx xxx
(e) "wholesale trade" means sales to dealers, industrial consumers,
Government, local authorities and other buyers, who or which purchase their
requirements otherwise than in retail".
From a perusal of clause (a) of sub-section (1), quoted above, it is clear
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that the duty of excise is chargeable on any excisable goods with reference
to value which shall, subject to the provisions of that section, be deemed
to be normal price at which such goods are ordinarily sold by the assessee
to a buyer in the course of wholesale trade for delivery at the time and
place of removal provided that the buyer is not a related person and the
price is the sole consideration for the sale. It is not in dispute that the
buyer is not a related person and the price is the sole consideration for
sale. It is also the common case that the respondent-assessee sold the
refrigeration machinery parts in wholesale trade at the price which was
approved by the excise authorities. Where normal price within the meaning
of clause (a) of subsection (1) is ascertainable, the provisions of clause
(b) cannot be resorted to. The show cause notice was issued to the assessee
on the ground that the cost of production of the goods was more than the
cost of wholesale price, so why the differential duty on the basis of costs
of production of the goods should not be recovered from it. The reasoning
in the show cause notice was adopted by the Assistant Collector in
confirming demand as well as by the Collector in rejecting the appeal. But
the Tribunal set aside the order of the Collector and allowed the appeal by
the order impugned in the appeal before us by the Revenue.
A perusal of the show-cause notice shows that it does not contain an
allegation that the wholesale price to the buyers was for consideration
other than the one at which it purported to be sold or that it was not at
arms length. There is also no allegation that there was any flowback of the
money from the buyer to the assessee. In the absence of these factors it
cannot be contended that normal price was not ascertainable. There is no
valid reason to doubt the genuineness of the sale price. It can therefore
be safely be concluded that the goods were sold at the normal price within
the meaning of Section 4(1 )(a) of the Act. In our view, the Tribunal is
right in accepting the wholesale price as the correct price following the
judgment of this Court in Union of India and Ors., v. Bombay Tyre
International Ltd. etc., (1983) 14 E.L.T. 1896. We hold that clause (b) of
sub-section (1) of Section (4) of the Act would not be attracted to
determine the nearest ascertainable equivalent of the normal price of the
goods for assessment of excise duty on the facts of this case. We do not
find any illegality in the order of the Tribunal in setting aside the
order’ of the Collector. The appeal is therefore dismissed. No costs.